The International Monetary Fund has approved a Sh255 billion loan for Kenya which the Treasury says would be used to support the next phase of the Covid-19 response and address the urgent need to reduce debt vulnerabilities.
The financing is under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF).
An initial disbursement of Sh79 billion is expected, of which Sh34 billion will be released immediately and Sh44.2 billion by June 30.
Treasury says the 38-month programme will help scale up Covid19 response; reduce debt vulnerabilities; address weaknesses in state-owned enterprises; and support financial stability.
Yatani said the country pursued the loan as the early measures announced by the government to the effect of tax reliefs, expanded health spending, and social interventions such as Kazi Mtaani set forth the need for additional cash.
The government says this was coupled with “uncertainties over the evolving nature of the Covid-19 pandemic as unsteadiness surrounding the supply of vaccines.”
“These require that the government be adequately resourced to make prompt and targeted interventions,” Yatani said in a statement.
“It is against this background that the government requested this disbursing programme, so as to cover these fiscal needs, by providing the additional resources.”
Yatani said the Treasury is confident that the support and reforms in the deal will go a long way to mitigating the effects of the pandemic and help achieve budget objectives.
“The granting of this request is not only timely but also an expression of confidence in the soundness of the extended credit facility programme.”
IMF says the Covid-19 shock exacerbated the country’s fiscal vulnerabilities, hence the need for additional funding support.